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Intel/NVIDIA bombshell: two rivals team up

Intel and NVIDIA have announced a settlement and a cross-licensing agreement …

Intel and NVIDIA have announced a six-year, $1.5 billion dollar technology cross-licensing deal that marks the end of a long patent dispute between the two chipmakers. On a conference call this afternoon, NVIDIA representatives described the agreement as a way to extend each company's access to the other's technology.

Intel will pay NVIDIA $1.5 billion over the next six years for access to its patent portfolio, which includes its GPU and supercomputing technology. In addition to the cash, NVIDIA will also get access to parts of Intel's patent portfolio, including patents covering microprocessors and chipsets. However, the deal excludes proprietary Intel x86 designs, and some other areas like flash memory.

If this sounds like a big deal for both companies and for the PC industry as a whole, that's because it is.

"The cross-licensing agreement allows Intel to integrate NVIDIA technologies and those that are covered by our patents into their CPUs, such as Sandy Bridge, for example," said Jen-Hsuan. "And a cross-license allows us to build processors and take advantage of Intel patents for the types of processor we're building—Project Denver, Tegra, and the types of processors we're going to build in the future."

As for the fabled NVIDIA x86 project, Jen-Hsuan definitively shut that down once and for all, and he did so multiple times.

"We have no intentions of building x86 processors," he stated, before explaining that Project Denver represents the future of processor efforts at NVDIA. "Our intention is to capitalize on the growing popularity of ARM processors... We've always felt that building yet another x86 processor when the world is a-flood with them is a pointless exercise." NVIDIA wants to build "the processor of the future," he said.

Jen-Hsuan repeatedly pointed to the 2004 cross-licensing agreement that NVIDIA entered into with Sony for the development of PlayStation 3 technology as a direct precedent of today's Intel deal. "The Sony agreement has generated more than $500 million in royalties," he said, which makes the Intel deal already three times larger.

"[The Sony deal] is a very similar thing to what we're doing with Intel. There's a lot of products that Intel would like to make that would include our technology and vice versa."

One of the products that NVIDIA will not be making as a result of the settlement is an Intel-compatible chipset. Jen-Hsuan made it clear that the company has stated that it has no plans to produce any more Intel-compatible chipsets, and despite settling the DMI bus licensing dispute that shut NVIDIA out of the Intel chipset market, the GPU maker is sticking to its guns.

With today's announcement coming on the heels of the Consumer Electronics Show, it's clear that the past seven days have been as huge for the PC and microprocessor industries as any in recent memory.

Correction: NVIDIA wrote in to tell us that our original headline was not accurate. An NVIDIA spokesperson said, "Licensing a technology is different than incorporating an entire processor. The settlement provides Intel with access to our IP and patents, such as Sandy Bridge which already uses NVIDIA technology. The license enables Intel to extend that model for the next 6 years."

Also, I deleted the following text from the article: "On the Intel side, NVIDIA CEO Jen-Hsuan confirmed that Intel could use the licensing agreement to produce a Sandy Bridge successor with an on-die GPU based on NVIDIA technology." It looks like NVIDIA's stance is that there's already NVIDIA IP in the Sandy Bridge IGP, because Sandy Bridge's GPU infringes on NVIDIA patents. This wrinkle wasn't at all clear from the announcement or the call—at least, it wasn't clear to me.

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